One investor likes NRG Energy and is using a highly unorthodox
strategy to establish a long position in the electricity-generation
company.
optionMONSTER's Heat Seeker tracking program detected the purchase
of 11,660 June 25 calls for about $1 and the sale of an equal
number of March 21 for about $0.80. Volume was more than 18 times
the open interest at each strike, indicating that a new position
was implemented.
Owning calls
and
selling puts
essentially gives the investor a double-long position because he or
she will make money to the upside but face losses to the downside.
The unusual aspect about this particular trade is that it uses
different expiration months, which provides three more months to
profit to the upside. (See our
Education
section for more on how you can turn
time into money
using options.)
NRG is trading at $22.66 this afternoon, up about 1 percent on the
day and almost 50 percent in the last six months. The stock has
been rallying back from long-term lows and has benefited from its
plan to save costs by merging with rival Genon.
Total option volume in NRG is 9 times greater than average so far
today, according to the Heat Seeker.
